Tech Cocktail: Tell us about Fundrise. Will it be affected by the JOBS Act crowdfunding regulations?

Benjamin Miller: We started Fundrise because we wanted the local community – our neighbors, friends, and future customers – to be our investment partners. Typically, real estate companies have to raise their capital from large-scale financial intermediaries instead of the local people who live near the real estate. At the time, the best approach available was Regulation A, which required us to qualify the offering with the SEC and register it in DC and Maryland (which took us about 8 months). The JOBS Act is designed to provide a much faster and less expensive alternative to democratize investment.

Tech Cocktail: Best-case scenario – what would be the best outcome of the new crowdfunding regulations?

Miller: The best-case scenario is if the JOBS Act unleashed in the investment industry, the same disruptive, entrepreneurial energies typical in the technology industry. Meaning, can the Internet do to the financial sector what it did to media and commerce? Today, the cost of financial intermediation as a percentage of US GDP has grown from less than 4 percent in 1950 to more than 9 percent in 2010 (source: NY Fed). What if the ruthless efficiency of technology and transparency drove a truly efficient capital market, bringing the cost of American finance back down to near 3 percent? An additional 6 percent in annual growth in GDP would bring us in line with China’s expansion rate.

Tech Cocktail: Worst-case scenario – what could be the worst outcome of the new crowdfunding regulations?

Miller: There are a lot of people planning to enter the crowdfunding space. However, if crowdfunding players are not careful, they could lose a lot of investor capital. If investors and the general public get badly burned, Congress could eliminate the new crowdfunding regulations. It is critical that crowdfunding is given time to work out the kinks, which will likely take a number of years.

Tech Cocktail:What’s your prediction for crowdfunding?

Miller: I expect the first few years of crowdfunding to be crowded and chaotic. Thousands of companies will be iterating on hundreds of different business models, of which many will not work. This entrepreneurial churn is most likely to result in the successful outcomes for which Congress and the administration originally aimed. However, a lot of people will lose money along the way. At the end of this initial phase (I wager within five years), the crowdfunding industry will start to become a substantial share of the financial sector and eventually become the dominant mode to challenge the “too big to fail” middleman structure that currently dominates finance.

Tech Cocktail: What are you most looking forward to at DCWEEK?

Miller: The tech industry, most represented by San Francisco, thinks about business in a fundamentally different way. For one week, DC sees an influx of people like this, and spending time with them always changes how I am thinking about the world (plus makes me realize how many smart people there are out there).

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Kira M. Newman is a Tech Cocktail writer interested in the harsh reality of entrepreneurship, work-life balance, and psychology. She is the founder of The Year of Happy and has been traveling around the world interviewing entrepreneurs in Asia, Europe, and North America since 2011. Follow her @kiramnewman or contact [email protected]